HR must prove its importance in boardroom

The activities and disciplines of HR are built on shifting sands. By definition the people side of a business is among the least stable and the challenges for benchmarking are far greater than in other functions.

In auditing and benchmarking more than 700 organisations over the past decade we have found there are at least as many ways of constructing and applying the HR activity. The aim of this series is to help you take an ordered approach to auditing and benchmarking HR in a way that recognises the practical difficulties and the fact there are seldom prescriptive solutions.

Input in decision-making

To be sure of a place at the decision-making table, HR professionals must present their case in the quantitative terminology the board understands and accepts. Our research and experience indicates that if you can put a cost on labour turnover, absenteeism, grievances and compare these with other organisations, the board will sit up and listen to solutions you propose.

Being able to put a value on the benefits of a training and development programme or competency framework and comparing the results you achieve, really does show that HR adds value to the bottom line. A well-focused and applied training programme can reduce labour turnover by 1.5 to 3 per cent. The calculated impact of this is a saving of £250,000 in an organisation of 1,000 employees (Croner’s Training and Development Briefing, July 2000).

Action on customers’ needs

Combining quantitative and qualitative aspects of HR audit allows you to take action to meet customer needs for service and effectiveness. The challenge of benchmarking your strongest and weakest HR deliverables certainly does focus the mind on how improvement can be achieved. A leading home furnishings company recently went through a co-ordinated HR audit and benchmarking process starting with an employee attitude survey and customer service audit, through a remuneration survey, to benchmarking HR cost effectiveness with leading competitors. The HR value added and effectiveness rating has more than doubled in under a year, and a positive impact is beginning to show on the bottom line.

Whether you are ready to embark on a major re-assessment of the role of HR or are considering individual issues such as reducing employee turnover, measuring training value, customer satisfaction, process benchmarking and improvement, Best Value or outsourcing HR, it is worth undertaking a preliminary assessment of “where the HR function is now” and comparing it against a known standard.

We hope this series will challenge you to improve the deliverables, quality and image of your HR function and that a noticeable difference will be achieved over a six-month period.

• For details on how to subscribe to HR Benchmarker, which is produced by Personnel Today and MCG, see p55.

Comments are closed.